US stocks rose in the first session of May after one of the S&P 500’s worst monthly results since the depths of the pandemic in 2020.
The S&P 500, Dow and Nasdaq turned positive in the final hour of trading on Monday. U.S. crude prices reversed earlier declines to above $105 a barrel and the benchmark 10-year Treasury yield rose to 3%, its highest level since December of 2018.
Investors this week are bracing for more events that could move the market after April’s volatile stretch of trading. The The S&P 500 sank 8.8% in April for its worst monthly performance since March 2020. Technology stocks, in particular, were battered, with the Nasdaq Composite falling 13% last month, the worst since October 2008.
The Federal Reserve’s upcoming monetary policy meeting will be watched especially closely in the coming days, with the central bank set to release its latest policy statement and hold a news conference with Fed Chairman Jerome Powell on Wednesday in the afternoon. Market participants expect the Fed to raise rates by 50 basis points at the end of this meeting, marking the first rate hike of this magnitude since 2000. The Fed raised rates by 25 basis points in Marchbringing the target range for the federal funds rate between 0.25% and 0.50% and pushing the low end of the range above zero for the first time since March 2020.
The Fed is also expected to formally announce that it will begin quantitative tightening, or the withdrawal of assets from its $9 trillion balance sheet. The central bank had raised assets and added to its balance sheet during the course of the pandemic as another means of helping support the virus-hit economy. However, expectations for the demise of this accumulation have sparked volatility after markets get used to these easy money policies.
And with US GDP growth turns negative for the first time since mid-2020 in the first quarter of this year, some experts have begun to question whether the Fed will be able to tighten monetary policies without causing a deeper drop in economic activity.
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“The risk of a recession has increased, and the financial health of the private sector may ultimately determine whether policy tightening will tip the economy into recession,” Goldman Sachs chief economist Jan Hatzius wrote. in a note on Sunday. “The financial fragility of the private sector has historically amplified the impact of the headwinds to today’s expansion: higher interest rates, rapid wage inflation and slower growth.”
Meanwhile, earnings season will also get underway this week, with a number of companies closely watched from Airbnb (ABNB) to Uber (UBER) and Lyft (LYFT) and Block Inc. (SQ) the results of each report. As of this week, 55% of S&P 500 constituents had reported actual first-quarter results, and of those, 80% beat earnings-per-share estimates, while 72% beat expectations for income according to FactSet data.
The expected rate of growth in earnings for companies in the S&P 500 as a whole also rose to 7.1 percent, up from 4.7 percent seen at the end of March, FactSet noted. Still, if the index’s first-quarter real earnings growth rate of 7.1% holds, it would mark the lowest rate since the fourth quarter of 2020.
4:04 PM ET: Stocks close higher as tech stocks rally: Nasdaq gains 1.6%, S&P 500 adds 0.6%
Here were the top market moves as of 4:04 PM ET:
S&P 500 (^GSPC): +23.47 (+0.57%) to 4,155.40
Dow (^DJI): +84.29 (+0.26%) to 33,061.50
Nasdaq (^IXIC): +201.38 (+1.63%) to 12,536.02
Crude (CL=F): +$0.90 (+0.86%) to $105.59 a barrel
Gold (GC=F): -$49.00 (-2.56%) to $1,862.70 per ounce
10-year treasury (^TNX): +10.9 bp for a return of 2.9960%
11:12 am ET: US manufacturing expansion unexpectedly slows in April to 20-month low: ISM
The Expansion of the US manufacturing sector slowed unexpectedly during April, with ongoing supply chain and price pressures dragging down output from goods-producing firms.
The Institution for Supply Management’s April manufacturing index fell to a 20-month low of 55.4 from 57.1 in March. Consensus economists were looking for a reading of 57.6, according to Bloomberg data. Readings above the neutral level of 50.0 indicate expansion in a sector.
The drop “is mainly due to weak demand amid a broader slowdown in global manufacturing, rather than a renewed supply crunch,” wrote Michael Pearce, senior U.S. economist at Capital Economics , in a note. “Most of the ISM weakness appears to reflect soft demand, particularly from the rest of the world, rather than a renewed tightening of supply constraints.”
Below the headline index, employment saw one of the sharpest declines, with the ISM manufacturing employment sub-index falling to 50.9 in April from 56.3 in March. More encouragingly, however, the sub-index of prices paid eased to 84.6, indicating some easing of inflationary pressures for manufacturers, although the level remained high by historical standards.
9:32 am ET: We open mixed stocks
Here were the top market moves as of 9:32 a.m. ET:
S&P 500 (^GSPC): +3.80 (+0.09%) to 4,135.73
Dow (^DJI): +80.64 (+0.24%) to 33,057.85
Nasdaq (^IXIC): -6.49 (-0.05%) to 12,328.15
Crude (CL=F): -$2.96 (-2.83%) to $101.73 a barrel
Gold (GC=F): -$48.30 (-2.53%) to $1,863.40 per ounce
10-year treasury (^TNX): +7.2 bp for a return of 2.9590%
7:43 am ET Monday: Stock futures head for a higher open
Here’s where the markets were trading Monday morning before the opening bell:
S&P 500 futures (IS=F): +7.5 points (+0.18%) up to 4,135.00
Dow futures (YM=F): +89 points (+0.27%) up to 32,971.00
Nasdaq Futures (NQ=F): +27.75 points (+0.22%) up to 12,879.75
Crude (CL=F): -$2.95 (-2.82%) to $101.74 a barrel
Gold (GC=F): -$32.40 (-1.69%) to $1,879.30 per ounce
10-year treasury (^TNX): +3.5 bp to get 2.92%
NEW YORK, NEW YORK – APRIL 28: Traders work on the floor of the New York Stock Exchange (NYSE) on April 28, 2022 in New York City. The Dow Jones Industrial Average rose in the morning as markets continued to move through a period of volatility on concerns about inflation and the war in Ukraine. (Photo by Spencer Platt/Getty Images)
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.